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NEW YORK — Treasury yields moved
higher across the board Thursday as investors weighed a coming
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showdown over the U.S. debt ceiling with economic data that
suggested inflation could remain sticky despite a slowing
economy.
The yield of one-month Treasury bills rose 10 basis points
to 3.86% a day after the U.S. House of Representatives narrowly
passed a bill that would raise the debt limit in exchange for
sweeping spending cuts. The bill is not expected to pass the
Senate.
The Treasury Department would no longer be able to all of
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its bills if an agreement is not reached by early summer.
Longer duration yields crept higher following data from the
Commerce Department showing that gross domestic product rose at
an 1.1% annualized rate in the first quarter, below the 2% rate
expected by economists polled by Reuters.
Still, consumer spending grew at a faster pace than
expected, while jobless claims fell to 230,000 from 246,000 the
prior week, suggesting that household spending remains strong
despite the Federal Reserve’s most aggressive rate hiking cycle
since the early 1980s.
The central bank is widely expected to raise benchmark rates
by 25 basis points at its policy meeting next week.
Following Thursday’s data reports, investors are now pricing
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in a nearly 30% chance that the central bank raises rates by
another 25 basis points at its June meeting, up from a 14%
chance seen the day before.
“The inflation print is driving the lion’s share” of trading
activity Thursday, said Benjamin Jeffrey, U.S. Rates strategist
at BMO Capital Markets.
The yield on 10-year Treasury notes was up 5.1
basis points to 3.481%, while the yield on the 30-year Treasury
bond was up 4.1 basis points to 3.730%.
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 10.9 basis
points at 4.033%.
April 27 Thursday 8:53AM New York / 1253 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 5.035 5.17 0.027
Six-month bills 4.8275 5.03 0.034
Two-year note 99-184/256 4.0229 0.099
Three-year note 100 3.7496 0.082
Five-year note 99-220/256 3.5309 0.066
Seven-year note 100-172/256 3.5145 0.058
10-year note 100-36/256 3.4825 0.053
20-year bond 100-100/256 3.8463 0.040
30-year bond 98-28/256 3.7304 0.041
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 29.50 -1.75
spread
U.S. 3-year dollar swap 17.00 -1.25
spread
U.S. 5-year dollar swap 7.75 0.50
spread
U.S. 10-year dollar swap -0.50 -0.50
spread
U.S. 30-year dollar swap -42.25 0.00
spread
(Reporting by David Randall, Editing by Nick Zieminski)
